Coordinating manufacturing and marketing in international firms

In this article, the authors argue that manufacturing experiences much of the turbulence and conflict imposed by the dynamic global marketplace through its relationship with marketing, because marketing is usually responsible for introducing changing competitive priorities and demand patterns to the organization. Through a survey of manufacturing and marketing managers within international firms, the authors develop a profile of manufacturing-marketing conflicts experienced in each of four international strategy environments: export, multidomestic, global, and transnational. As international strategies became more complex, firms made use of more techniques for coordinating between marketing and manufacturing, with more use of decentralized and informal approaches. Coordinating techniques included individual MBO-reward systems, joint task forces for problem-solving, and direct involvement of manufacturing and marketing in establishing the competitive priorities of the firm.     

Entrepreneurial retrenchment among small manufacturing firms

Strategic management researchers have traditionally focused on growth-oriented strategies for small firms. Yet studies of small businesses have consistently cited overzealous pursuit of growth as the number one contributor to financial decline and failure. Record numbers of small firms are finding themselves confronted with declines of sufficient magnitude to require the implementation of turnaround strategies.Much has been written about turnaround strategies for large corporations—the problem is that the commonly recommended turnaround strategies are not often feasible for small firms. Unfortunately, there are no investigations reported in the literature that approach the subject of turnaround from the perspective of the small-market-share businesses.The purpose of this research was to explore turnaround from the small firm perspective. The study focused on the turnaround strategy most often referred to as entrepreneurial retrenchment, i.e., the aggressive pursuit of cost and asset reduction. The results showed that firms that pursued entrepreneurial retrenchment were more successful than firms that continued to pursue growth with the preexisting configuration of assets, even after a period of extensive cost cutting. The findings suggest strongly that managers of successful small-market-share firms must be able to quickly recognize and ameliorate underper forming assets when they encounter turnaround situations.The findings were a result of empirical analyses of 33 small-market-share firms that had encountered turnaround situations. Turnaround situations were initially identified by the incidence of at least two successive years of declining profitability that exceeded any industry-wide decline that may have occurred over the same time period. The firms were subsequently contacted to verify that they considered the timeframe to indeed coincide with a period during which their managerial actions were targeted to achieve a performance turnaround.Each of the firms was then classified according to the direction of their cost and asset changes over the turnaround period. Nonretrenchers were those firms that did not achieve net reductions in costs or assets for any years after the decline. Cost retrenchers were those firms that achieved net costs reductions but not asset reductions for a minimum of one year succeeding the decline. Finally, entrepreneurial retrenchers were those firms that sustained a minimum of one year of asset reductions in addition to cost reductions in the years immediately after the decline.Although entrepreneurship research has traditionally focused on developing and investing in new businesses, little has been done on the issue of asset restructuring that precedes entrepreneurial endeavors in established companies (Robinson and Pearce 1988). For single businesses the essence of entrepreneurship is the ability to quickly respond to marketplace opportunities. The underside of this pursuit is the ability to quickly reposition assets to accompany ensuing moves for competitive viability.For single business firms, an inability to respond quickly to financial downturns creates turnaround situations. Therefore, an examination was prepared to determine the value of retrenchment as a means to achieve turnaround and financial stability.The results were produced through an analysis of longitudinally collected financial data that was used to profile each firm's turnaround situation severity, their classification of retrenchment, and the degree to which they were able to successfully achieve a return to predownturn financial performance.     

The efficiency of small manufacturing firms in Japan

It has been suggested that market structure will have an impact on within-industry differentials in efficiency, or cost disadvantages of small firms. To test this hypothesis, this paper examines the effects of market structure on the productivity (relative to industry productivity) of small manufacturing firms in Japan. The results show that market structure elements such as concentration and capital requirements work to the disadvantage of small-firm efficiency. The findings provide support for the hypothesis.     

Exporting raises productivity in sub-Saharan African manufacturing firms

Proponents of trade liberalization argue that exporting helps firms to achieve higher productivity levels. This hypothesis is examined for a panel of manufacturing firms in nine African countries. The results indicate that exporters in these countries are more productive and, more importantly, exporters increase their productivity advantage after entry into the export market. While the first finding can be explained by selection–only the most productive firms engage in exporting–the latter cannot. The results are robust when unobserved productivity differences and self-selection into the export market are controlled for using different econometric methods. Scale economies are shown to be an important channel for the productivity advance. Credit constraints and contract enforcement problems prevent firms that only produce for the domestic market from fully exploiting scale economies.     

Exporting raises productivity in sub-Saharan African manufacturing firms

Proponents of trade liberalization argue that exporting helps firms to achieve higher productivity levels. This hypothesis is examined for a panel of manufacturing firms in nine African countries. The results indicate that exporters in these countries are more productive and, more importantly, exporters increase their productivity advantage after entry into the export market. While the first finding can be explained by selection-only the most productive firms engage in exporting-the latter cannot. The results are robust when unobserved productivity differences and self-selection into the export market are controlled for using different econometric methods. Scale economies are shown to be an important channel for the productivity advance. Credit constraints and contract enforcement problems prevent firms that only produce for the domestic market from fully exploiting scale economies.     

Which manufacturing firms learn by exporting?

Using a longitudinal database (1996–2003) at the plant level, this article analyses the causal nexus between international trade engagement and productivity in Portugal. By applying the propensity score matching and a differences-in-differences estimator, the learning-by-exporting hypothesis is analysed in particular. A higher growth of labour productivity and total factor productivity is found for new exporting firms. To uncover the channels through which the learning effects are driven, the same methodology is applied to some sub-samples. Learning effects are higher for new exporters that are also importers or start importing at the same time. Other factors affecting learning ability are found in firms exporting to more developed markets, in those that achieve a certain threshold of export intensity and mainly for those firms that belong to sectors where Portugal has a comparative disadvantage.     

The branding challenges of Asian manufacturing firms

During the past quarter of a century, Asia has risen to become the world's factory. This trend has, however, coincided with the relative decline in value of manufacturing compared to other value adding activities, including R&D, design, and branding. This significant “value shift” has eroded the margins of manufacturing firms and sparked considerable interest among executives in Asia to design, brand, and market their own products. To date, though, this transition from being manufacturing oriented to becoming brand owners has largely only been accomplished by Japanese and Korean firms. In the rest of Asia—including in the rising giants of China and India—there are very few valuable brands. In fact, there is not a single Asian brand from a country other than Japan and Korea in Interbrand's 2008 valuation of the world's top 100 brands. Our article discusses, in depth, the challenges that Asian manufacturing firms encounter as they try to become “branders” and how these challenges can be overcome. Based on our collaboration spanning academia and consulting, we have been able to tap a wealth of information made available through research, case studies, and Interbrand's database of completed brand related assignments across Asia.     

Entry,growth and survival of manufacturing firms

This paper examines the interactions between entry size, growth rate, and probability of survival of firm. Standard microeconomics states that firm growth stems from relative efficiency differentials and that growth positively affects the likelihood of survival. Therefore, the selection hypothesis is unable to explain how a wide number of small newly born firms can survive at length even without growth and how an even larger set of firms with a higher than average growth rate exits the market in the first few years after the foundation. It is shown that one way out of these apparent paradoxes is to relax the hypothesis of a one-to-one link between initial relative efficiency and survival, and then develop a model based on different entry modes and growth patterns of the newly born firms.     

A comparative analysis of the entrepreneurial orientation/growth relationship in service firms and manufacturing firms

This article builds on the recently increasingly mentioned notion that entrepreneurship in the service sector is a worthwhile, but clearly underresearched topic. Using a sample of 1,612 small- and medium-size enterprises from the four German-speaking countries Germany, Austria, Switzerland, and Liechtenstein, and using structural equation modeling, this article finds that service firms have a significantly higher entrepreneurial orientation (EO) than manufacturing firms – both on the overall level as well as for each of the three sub-categories proactiveness, innovativeness, and risk-taking. With regards to the positive relationship between a firm's EO and its growth aspirations, nevertheless, no significant differences could be identified. Accordingly, this study shows that EO is a strategic orientation of highest value for service firms as well, under the premise of growth-orientation.     

Absorptive capacity from foreign direct investment in Spanish manufacturing firms

This paper deals with the determinants of absorptive capacity from foreign direct investment (FDI) spillovers. We study how firm behavior, capabilities, and structure drive absorptive capacity such as research and development (R&D) activities and expenditures, R&D results, internal organization of innovation, external relationships of innovation, human-capital quality, family management, business complexity, and market concentration. Our results enhance and complement previous evidence of the determinants of absorptive capacity, particularly with different approaches to innovative activities as mediators of the capability.     

Offshore production and skill upgrading by Japanese manufacturing firms

We investigate the influence of offshore production by Japanese multinationals on domestic skill intensity. Identifying relationships based on within variation in a panel of 1070 firms, we find that additional foreign affiliate employment in low-income countries raises skill intensity. The positive effect of FDI on domestic skill intensity, however, diminishes as investment shifts towards high-income countries. Increases in affiliate employment in low-income countries also raise a firm’s reliance on finished goods purchases, suggesting that overseas employment affects domestic skill intensity because imports of final goods from foreign affiliates displace domestic production.     

The organisational learning system within small UK manufacturing firms

Organisational learning is increasingly being mentioned in the literature as a mechanism for assisting the market performance of small firms. There exists, however, limited empirical evidence on the learning systems utilised to manage the process. A survey was undertaken to acquire data on whether a relationship exists between learning style and the nature of learning systems used by small UK manufacturing firms. The results suggest that as firms move from single towards double-loop learning this is accompanied by the adoption of a more formalised learning system inside the organisation. The implications of these finding are discussed and proposals presented on the needs for further research.     

A new entrepreneurial drive in large and small manufacturing firms in Japan

Japan's per capita GDP growth has been decelerating for at least three decades, despite groping towards better ways of accommodating individualistic Smithian market forces. Japan has made great progress in opening markets and fostering profit seeking, yet it has not reaped the benefits anticipated so far. Facing the most severe economic downturn of the post-war period, it is now rethinking the fundaments of its economic and management system. The necessity of developing competitive advantages in new industries has been identified but a crucial question is how they will affect the way industry has organized itself to maximize quality, efficiency and flexibility. It is said that an entrepreneurial culture was not needed during the post-war period in Japan because a group-based industrial organization could generate about the same dynamism and outcome. Nevertheless, this time, a venture-type business culture may be a key factor in the renewal of the Japanese economy to put it back on a sustainable growth path. The objective of the article is to make a critical assessment of the trends in entrepreneurship in Japan, using secondary data. They are complemented by partial results of two surveys made by the author, the first one in 1997 in ten electronic companies on intrapreneurship schemes, and the second one in 1998 in 40 small companies in the Hiroshima prefecture, centred on human resource management. To these are added information obtained through interviews in the small business agency, MITI, and a number of universities on business-university research collaboration schemes.     

The role of service embeddedness in the internationalisation process of manufacturing firms

Over the last decade the growth of service firms, and their internationalisation, has attracted considerable attention from researchers, with a special focus on characteristics that distinguish services from goods. However, as the composition of a firm's product can contain both good and service elements, this paper argues that it is somewhat misleading to categorise a product simply as either a ‘good’ or a ‘service’. Manufactured goods often contain client-related services embedded in them. Further, the nature of these embedded services may vary with respect to their degree of separability of production and consumption. Based on several case studies of Australian manufacturing subsidiaries in the UK, this paper examines the impact of inseparable embedded services on a firm's entry-mode choice. It reveals that the extent and nature of embedded services have a considerable impact on a firm's choice of foreign entry mode. The research findings are likely to contribute to the existing marketing and internationalisation literature.     

A comparative study of innovation behaviour in Singapore's KIBS and manufacturing firms

While most services innovation studies are concentrated on the OECD or EU countries, research on services innovation in the non-OECD context is still rare. This study investigates innovation behaviour of a certain group of services – knowledge-intensive business services (KIBS), compared with the manufacturing sector in Singapore. The main findings of this study are: (1) KIBS firms have higher innovating ratio than manufacturing firms, but innovating manufacturing firms are more likely to do R&D than innovating KIBS firms; (2) KIBS firms have higher human capital intensity, training spending intensity, innovation spending intensity, and R&D spending intensity than manufacturing firms; (3) KIBS firms and manufacturing firms have similar innovation objectives, although some delicate nuances do exist; (4) KIBS firms are less likely to have overseas partners for innovation collaboration than manufacturing firms; (5) there is a U pattern of innovation collaboration with geographic distance for both KIBS and manufacturing firms; (6) social capitals are important for KIBS firms' successful provision of innovation support to manufacturing clients; (7) the importance of spatial proximity varies over different phases of innovation support.     

Exploring the effects of international sourcing on manufacturing versus service firms

As the extent of international sourcing rises and the number of functional activities spreading across-national borders increases, there is a call for a better understanding of its impact on structural change. In this work, we explore the effects of international sourcing comparatively and look for differences between manufacturing and service firms. This study is based on a unique Slovenian data set that links the recently conducted Eurostats survey on international sourcing with a detailed financial firm-level data. The results from the matching methodology suggest that service firms involved in international sourcing gain an improvement in the quality and technological learning, resulting in the employment growth and development. This is not the case for manufacturing firms driven primarily by cost cutting. In our view, a better understanding of these effects is vital for both manufacturing as well as service firms that are influenced by this new trend.     

The export propensity of Turkish manufacturing and trading house firms∗

A substantial amount of research has been carried out on the export marketing behaviour of firms during the last twenty years. However, most of these studies have looked at the export behaviour of firms in a developed country. The present study examines the export orientation of Turkish manufacturing and trading house firms and tries to differentiate these two types of firms in terms of their export drives. The findings of this study may be applicable to other developing countries which are at a level of economic development similar to that of Turkey.     

The environmental effect of trade liberalization: Evidence from China's manufacturing firms

While prior literature on trade liberalisation and the environment has mostly focused on the macroeconomic ramifications, this study explores at the firm level whether and how changes of trade barriers brought about by China's accession to the WTO may impact on its manufacturing firms’ environmental performance. Adopting a difference-in-differences (DID) methodology, we document the effects of tariff reductions on improving firm-level SO2 emission intensity, and the key corporate strategic decisions responsible for delivering the observed results, with robustness tests covering other major pollutants. In response to trade liberalisation, firms are found to increase labour resources for environmental protection and to improve their production processes to reduce emission intensity. This study contributes to the literature by investigating at the level of the operating firm how output and input tariff reductions may impact on environmental performance and uncovering for the first time the specific actions responsible for the results.     

Marketing and company performance: An examination of medium sized manufacturing firms in Britain

In recent years several studies have pointed to the importance of marketing to company performance and considerable emphasis has been placed, in Britain, on improving the marketing performance of small and mediumsized enterprises. Based on a mail survey of 231 medium sized manufacturing firms in the U.K., and in-depth inteviews with the Chief Marketing Executive of a sub-sample of 20 firms, the study confirms that the most successful companies are those which are marketing orientated. Nevertheless, several traditional tenets of marketing are questioned by the findings and it would seem that the traditional marketing model, as developed for large companies, is neither entirely necessary nor applicable for the smaller firm.